Inter-sectoral Linkages and Multipliers of MGNREGA in a Rainfed Village in Karnataka: Applications of Social Accounting Matrix (SAM)

Abstract

This chapter examines inter-sectoral linkages of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) interventions in a village economy of Karnataka state. This is done using framework of social analysis matrix (SAM) in Markabbinahalli village, a predominantly a rainfed village, of Bijapur District in northern Karnataka. An in-depth survey was done in 2013, SAM of 82 × 82 column and rows (activities) was constructed to analyze direct, indirect and inter-sectoral linkages of village level activities for year of 2012–13, in relation to MGNREGA interventions. The SAM analysis suggests that additional investment of Rs. 1 million by MGNREGA in the studied village increased 1.1% of total income of the village, provided a full employment to 18 households at the rate of 340 days of work per person per household annually at a wage rate of Rs. 300 per day. Major share of the MGNREGA investment went to indirect impact (84%), also known as multiplier effects of the investment. The net impact of MGNREGA on labour income in the studied village was weak due to expenditure to several activities that were produced outside of villages such as machinery uses in construction, skilled labour uses, etc. We suggest that making the programme more demand driven, taking more labour intensive work activities under MGNREGA would also ensure more circulation of MGNREGA expenditures within the local economy, which would produces more employment and income locally due to increased feedback and inter-sectoral linkage (or multiplier) effects